What Does “Motivated Seller” Actually Mean?
October 29th, 2009 categories: Buyer Resource, Seller Resource, Short Sales
Motivated Seller. What do you think of when you hear that term? It really makes a lot of people think; gets some excited, makes some skeptical, and means little to others.
Most buyers, they think the seller will lower the sales price dramatically just to accept their offer…this may be wishful thinking. To other buyers, they may wonder why the home has not sold and may think there are issues with the home. Other buyers think this is just saying that the seller is willing to negotiate. I think of very little when I hear the term “Motivated Seller” and I am sure there are other valid thoughts as well.
My thought is that some Real Estate Agents say a seller is a Motivated Seller just to get attention on the listing. Very rarely do I see a listing that has an accepted price more than 10% below asking. Some listings DO sell for big discounts, and we will investigate any of those situations for you; just ask!
Motivated Seller could mean so many things to so many people. I believe that to truly know what the term means in any given situation, go to the source…ask your Real Estate Agent to ask whoever is saying it. It is a fair question, and one that SHOULD be asked of any listing agent who uses the term. Unless the seller agrees to such aggressive wording, I would argue that it does a great disservice to the seller, potentially frustrating buyers who have different ideas about the meaning, and an angry buyer does not usually close a deal.
On a side note, VERBOSE RANT RATHER, there are durable good known as commodities. These are good that are virtually similar to other goods. Bottled water is one example of a commodity that most people are familiar with. How is store brand water different from name brand water such as Dasani or Arrowhead Springs? It really is not, so why would anyone pay more for water? Branding and advertising work to make their product appear vastly different…in this example of store brand versus name brand water…is the name brand designer water twice as good as the store brand water? Likely not, so why is the name brand designer water twice the price?
There is a whole commodities exchange in Chicago, IL; the Mercantile Exchange where goods such as gold, corn, soybeans, frozen concentrated orange juice, etc. are traded. The “Merc” is in the scene from Ferris Bueller’s Day Off where Cameron is making hand signals (Three Stooges Gestures I believe) at the floor traders? Remember that? Anyway, at the Merc, traders buy and sell commoditized products from all different sources, and pay the lowest prices for a given product…showing no differentiation other than price. Low Cost Wins in the case of commodities.
So what is the point of that name brand versus store brand commodity rant? I am getting there… So…Commodities are SO similar that the rational consumer should choose the one with the best price, and focus on nothing else. So when an agent says “Motivated Seller” and is using pricing as the main strategy, they are overlooking the positive aspects of a property that makes it unique. ALL properties are unique in some way, and that is what listing agents should focus on, NOT price…unless a home is so cookie cutter there truly is no difference. In reality, all homes compete on age, price, square footage, bedrooms, bathrooms, layout, and the often overlooked yet extremely important condition. Homes compete on many different aspects, and in my opinion are rarely the exact same. Even homes in the same neighborhood, built by the same builder in the same year, are unique in lot location, view, and condition…these three attributes can mean huge swings in value of a home, which is why I argue most homes are unique in some way and should not compete on price only…so why would an agent advertise on price? The free market will ultimately decide the value of Real Estate…the free market in this case is the collective group of rational buyers and sellers.
We do not have any real issues with what a listing says, unless it is untrue or intentionally misleading. My personal opinion for truly motivated sellers is to lower the list price to their rock bottom price or very close to it, and hope for multiple offers, potentially raising the price above asking. If an offer comes in below the bottom line amount, respond with a counter offer with a price that is what the seller needs it to be. If the seller is out of the market with their price/needs, then there are other alternatives (rent if possible, short sale, foreclosure, deed in lieu of foreclosure, loan modification, etc), and that is a whole other subject to discuss…at a later time.
If you ever see a listing that states that a Motivated Seller is selling their home, feel free to ask us to check it out. We will find out for you, and report back with all relevant information. Maybe it is a great deal, or maybe it is just some uninspired verbiage from someone who can say nothing interesting about the home. We look forward to speaking with you about Sonoma County and all of the unique properties here.
